EN BANC

[G.R. No. 24137. March 29, 1926. ]

EULOGIO BETITA, Plaintiff-Appellee, v. SIMEON GANZON, ALEJO DE LA FLOR,
and CLEMENTE PEDREA, Defendants-Appellants.
Padilla, Trefias & Magalona for Appellants.
Varela & Ybiernas for Appellee.
SYLLABUS
1. UNRECORDED CHATTEL MORTGAGE; EFFECT AS AGAIN THIRD PARTIES. A
document purporting to be a chattel mortgage, but which is not executed in conformity with the
Chattel Mortgage Law and has not been recorded, is of no effect as against parties.
2. PLEDGE; EFFECT AS AGAINST THIRD PARTIES; EVIDENCE OF DATE MUST
APPEAR IN PUBLIC INSTRUMENT. A pledge is not effective as against third parties
unless evidence of its date appears in a public instrument.
3. DOCUMENT OF PLEDGE; FILING WITH SHERIFF CREATES NO SUPERIOR TO A
PREVIOUS ATTACHMENT. The filing of a private document of pledge with the sheriff
after the levy of execution does not create a lien superior to that of the attachment.
4. PLEDGE; POSSESSION OF PROPERTY. The delivery of possession referred to in article
1863 of the Civil Code and essential to the validity of a pledge means actual possession of the
property pledged and a mere symbolic delivery is not sufficient.
DECISION
OSTRAND, J. :
This action is brought to recover the possession of four carabaos with damages in the sum of
P200. Briefly stated the facts are as follows: On May 15, 1924, the defendant Alejo de la Flor
recovered a judgment against Tiburcia Buhayan for the sum of P140 with costs. Under this
judgment the defendant Ganzon, as sheriff, levied execution on the carabaos in question which
were found in the possession of one Simon Jacinto but registered in the named Tiburcia
Buhayan. The plaintiff herein, Eulogio Betita presented a third party claim (terceria) alleging that
the carabaos had been mortgaged to him and as evidence thereof presented a document dated
May 6, 1924, but the sheriff proceeded with the sale of the animals at public auction where they
were purchased by the defendant Clemente Pedrea for the sum of P200, and this action
thereupon brought.

The document upon which the plaintiff bases his cause of action is in the Visayan dialect and in
translation reads as follows:
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"I, Tiburcia Buhayan, of age, widow and resident of the sitio of Jimamanay, municipality of
Balasan, Province of Iloilo, Philippine Islands, do hereby execute this document extrajudicially
and state that I am indebted to Mr. Eulogio Betita, resident of the municipality of Estancia,
Province of Iloilo, Philippine Islands, in the sum of P470, Philippine currency, and was so
indebted since the year 1922, and as a security to my creditor I hereby offer four head of
carabaos belonging to me exclusively (three females and one male), the certificates of
registration of said animals being Nos. 2832851, 4670520, 4670521 and 4670522, which I have
delivered to said Mr. Eulogio Betita.
"I hereby promise to pay said debt in the coming month of February, 1925; in case I will not be
able to pay, Mr. Eulogio Betita may dispose of the carabaos given as security for said debt.
"This document is a new one or a renewal of our former document because the first carabaos
mortgaged died and were substituted for by the newly branded ones.
"In testimony whereof and not knowing how to sign my name, I caused my name to be written
and marked same with my right thumb.
"Estancia, May 6, 1924.
(Marked). "TIBURCIA BUHAYAN
"Signed in the presence of:

jgc:chanrobles.com.ph

"MIGUEL MERCURIO
"TIRZO ZEPEDA"
The court below held that inasmuch as this document was prior in date to the judgment under
which the execution was levied, it was a preferred credit and judgment was rendered in favor of
the plaintiff for the possession of the carabaos, without damages and without costs. From this
judgment the defendants appeal.
The judgment must be reversed unless the document above quoted can be considered either a
chattel mortgage or else a pledge. That it is not a sufficient chattel mortgage is evident; it does
not meet the requirements of section 5 of the Chattel Mortgage Law (Act No-1508), has not been
recorded and, considered as a chattel mortgage, is consequently of no effect as against third
parties (William v. McMicking, 17 Phil., 408; Giberson v. A. N. Jureidini Bros., 44 Phil., 216;
Benedicto de Tarrosa v. F. M. Yap Tico & Co. and Provincial Sheriff of Occidental Negros, 46
Phil., 753).
Neither did the document constitute a sufficient pledge of the property valid against third parties.
Article 1865 of the Civil Code provides that "no pledge shall be effective as against third parties

unless evidence of its date appears in a public instrument." The document in question is not in
public, but it is suggested that its filing with the sheriff in connection with the terceria gave it the
effect of a public instrument and served to fix the date of the pledge, and that it therefore fulfills
the requirements of article 1865. Assuming, without conceding, that the filing of the document
with the sheriff had that effect, it seems nevertheless obvious that the pledge only became
effective as against the plaintiff in execution from the date of the filing and did not rise superior
to the execution attachment previously levied (see Civil Code, article 1227).
Manresa, in commenting on article 1865, says:

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"ART. 1865. A pledge will not be valid against a third party if the certainty of the date is not
expressed in a public instrument.
"This article, the precept of which did not exist in our old law, answers the necessity for not
disturbing the relationship or the status of the ownership of things with hidden or simulated
contracts of pledge, in the same way and for the identical reasons that were taken into account by
the mortgage law in order to suppress the implied and legal mortgages which produce so much
instability in real property.
"Considering the effects of a contract of pledge, it is easily understood that, without this warranty
demanded by law, the case may happen wherein a debtor in bad faith from the moment that he
sees his movable property in danger of execution may attempt to withdraw the same from the
action of justice and the reach of his creditors by stimulating, through criminal confabulations,
anterior and fraudulent alterations in his possession by means of feigned contracts of this nature;
and, with the object of avoiding or preventing such abuses, almost all the foreign writers advise
that, for the effectiveness of the pledge, it be demanded as a precise condition that in every case
the contract be executed in a public writing, for otherwise, the determination of its date will be
rendered difficult and its proof more so, even in cases in which it is executed before witnesses,
due to the difficulty to be encountered in seeking those before whom it was executed.
"Our code has not gone so far, for it does not demand in express terms that in all cases the pledge
be constituted or formalized in a public writing, nor even in private document, but only that the
certainty of the date be expressed in the first of the said class of instruments in order that it may
be valid against a third party; and, in default of any express provision of law, in the cases where
no agreement requiring the execution in a public writing exists, it should be subjected to the
general rule, and especially to that established in the last paragraph of article 1280, according to
which all contracts not included in the foregoing cases of the said article should be made in
writing even though it be private, whenever the amount of the prestation of one or of the two
contracting parties exceeds 1,500 pesetas." (Vol. 12, 2d ed., p. 421.)
If the mere filing of a private document with the sheriff after the levy of execution can create a
lien of pledge superior to the attachment, the purpose of the provision Article 1865 as explained
by Manresa would clearly be defeated. Such could not have been the intention of the authors of
the code. (See also Ocejo, Perez & Co. v. International Banking Corporation, 37 Phil., 631, and
Bi & Co. v. Chartered Bank of India, Australia & China, 41 Phil., 596.)

The alleged pledge is also ineffective for another reason, namely, that the plaintiff pledge never
had actual possession of the property within the meaning of article 1863 of the Civil Code. But it
is argued that at the time of the levy the animals in question were in the possession of one Simon
Jacinto;- that Jacinto was the plaintiffs tenant; and that the tenants possession was the
possession of his landlord.
It appears, however, from the evidence that though not legally married, Simon Jacinto and
Tiburcia Buhayan were living together as husband and wife and had been so living for many
years. Testifying as a witness for the plaintiff, Jacinto on cross-examination made the following
statements:
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"Q. But the caraballas in question had never been possession of Eulogio Betita? A. The three
young ones did not get into his hands.
"Q. And the others?. A. Sometimes they were in hands of Betita and at other times in the
hands of Buhayan.
"Q. Those are the caraballas which formerly were mortgaged by Buhayan to Betita, isnt that so?
A Yes, sir.
"Q. And the four carabaos now in question had never been in possession of Betita, but were in
your possession? A When I worked they were in my hands.
"Q. And before you worked, these caraballas were in possession of your mistress, Tiburcia
Buhayan? A. Yes sir.
"Q. Do you mean to say that from the possession of Tiburcia Buhayan the animals passed
immediately into your possession? A. Yes sir."
cral aw virtua1aw library

This testimony is substantially in accord with that of the defendant sheriff to the effect that he
found the animals at the place where Tiburcia Buhayan was living. Article 1863 of the Civil
Code reads as follows:
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"In addition to the requisites mentioned in article 1857, it shall be necessary, in order to
constitute the contract of pledge, that the pledge be placed in the possession of the creditor or of
a third person appointed- by common consent."
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In his commentary on this article Manresa says:

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This requisite is most essential and is characteristic of a pledge without which the contract
cannot be regarded as entered into or completed, because, precisely, in this delivery lies the
security of the pledge. Therefore, in order that the contract of pledge may be complete, it is
indispensable that the aforesaid delivery take place . . . (P. 411, supra.)
It is, of course, evident that the delivery of possession referred to in article 1863 implies a change
in the actual possession of the property pledged and that a mere symbolic delivery is not

sufficient. In the present case the animals in question were in the possession of Tiburcia Buhayan
and Simon Jacinto before the alleged pledge was entered into and apparently remained with them
until the execution was levied, and there was no actual delivery of possession to the plaintiff
himself. There was therefore in reality no change in possession.
It may further be noted that the alleged relation of landlord and tenant between the plaintiff and
Simon Jacinto is somewhat obscure and it is, perhaps, doubtful if any tenancy, properly
speaking, existed. The land cultivated by Jacinto was not the property of the plaintiff, but it
appears that a part of the products was to be applied towards the payment of Tiburcia Buhayans
debt to plaintiff. Jacinto states that he was not a tenant until after the pledge was made.
From what has been said it follows that the judgment appealed from must be reversed and it is
ordered and adjudged that the plaintiff take nothing by his action. Without costs. So ordered.
Avancea, C.J., Street, Villamor, Johns, Romualdez and Villa-Real, JJ., concur.
Malcolm, J., concurs in the result.